Goldman Sachs raises Apple target to $150 in anticipation of blockbuster 'iPhone 8'
Goldman Sachs is "increasingly confident" in Apple's upcoming fall refresh of the iPhone, as the firm on Monday cited potential use of OLED and augmented reality in raising its price target for the company to $150.
Maintaining a "Buy" rating on Apple stock, Goldman Sachs analyst Simona Jankowski advised in a note received by StreetInsider that high confidence in the "iPhone 8" product in the second half of the year is boosting both forecasts and the target price. The new target of $150 is up $17 from the previous target of $133, a figure Apple beat Monday morning by opening at $133.08 per share.
Goldman Sachs has increased its iPhone shipment forecast to 230 million units for the 2017 calendar year, up from a previous prediction of from 227.3 million. Looking forward to 2018, Jankowski expects iPhone shipments to reach 235.9 million, up from her previous forecast of 231.5 million.
Anticipated accelerated earnings growth for the next two years has also led to a change for the target multiple from 14 times to 16 times, with Jankowski claiming this is "to better capture that inflection."
Jankowski believes rumors about the inclusion of augmented reality technology in the upcoming iPhone refresh are "increasingly likely," with the use of 3D sensing technology able to "enable a robust augmented reality feature set that we believe will be a key differentiator for the 10-year anniversary iPhone."
Apple has reportedly worked on augmented reality for a while, with ongoing rumors of an AR headset produced in collaboration with Zeiss, as well as AR-related patents. Apple CEO Tim Cook has also spoken out about AR, showing an interest of it being used as a "core technology" that could have a wide variety of real-world uses.
The 3D-sensing abilities that could appear in the next iPhone are considered by Jankowski as "a significant step-up in innovation" compared to the previous two iPhone cycles, "especially when viewed in conjunction with the potential significant form factor change enabled by the move to an OLED display."
OLED is also the subject of iPhone rumors over the last few years, replacing the LCD display to lower power consumption and increase flexibility, among other benefits. A recent report claims Apple is preparing to move over to the display technology, with a $4.3 billion contract with Samsung providing Apple with 60 million 5-inch OLED panels.
Jankowski also cites "supply-chain checks" that suggest a third 5.8-inch iPhone model will be offered to consumers, with a price anticipated to be above the $649 and $769 starting prices of the 4.7-inch iPhone 7 and 5.5-inch iPhone 7 Plus. This also ties into other reports claiming there to be a new high-end iPhone that will cost at least $1,000.
Maintaining a "Buy" rating on Apple stock, Goldman Sachs analyst Simona Jankowski advised in a note received by StreetInsider that high confidence in the "iPhone 8" product in the second half of the year is boosting both forecasts and the target price. The new target of $150 is up $17 from the previous target of $133, a figure Apple beat Monday morning by opening at $133.08 per share.
Goldman Sachs has increased its iPhone shipment forecast to 230 million units for the 2017 calendar year, up from a previous prediction of from 227.3 million. Looking forward to 2018, Jankowski expects iPhone shipments to reach 235.9 million, up from her previous forecast of 231.5 million.
Anticipated accelerated earnings growth for the next two years has also led to a change for the target multiple from 14 times to 16 times, with Jankowski claiming this is "to better capture that inflection."
Jankowski believes rumors about the inclusion of augmented reality technology in the upcoming iPhone refresh are "increasingly likely," with the use of 3D sensing technology able to "enable a robust augmented reality feature set that we believe will be a key differentiator for the 10-year anniversary iPhone."
Goldman Sachs analyst Simona Jankowski believes rumors about the inclusion of augmented reality technology in the upcoming iPhone refresh are "increasingly likely."
Apple has reportedly worked on augmented reality for a while, with ongoing rumors of an AR headset produced in collaboration with Zeiss, as well as AR-related patents. Apple CEO Tim Cook has also spoken out about AR, showing an interest of it being used as a "core technology" that could have a wide variety of real-world uses.
The 3D-sensing abilities that could appear in the next iPhone are considered by Jankowski as "a significant step-up in innovation" compared to the previous two iPhone cycles, "especially when viewed in conjunction with the potential significant form factor change enabled by the move to an OLED display."
OLED is also the subject of iPhone rumors over the last few years, replacing the LCD display to lower power consumption and increase flexibility, among other benefits. A recent report claims Apple is preparing to move over to the display technology, with a $4.3 billion contract with Samsung providing Apple with 60 million 5-inch OLED panels.
Jankowski also cites "supply-chain checks" that suggest a third 5.8-inch iPhone model will be offered to consumers, with a price anticipated to be above the $649 and $769 starting prices of the 4.7-inch iPhone 7 and 5.5-inch iPhone 7 Plus. This also ties into other reports claiming there to be a new high-end iPhone that will cost at least $1,000.
Comments
Apple hasn't been that company really ever, and certainly not since the return of Steve Jobs in 1997. Starting at least 10 years ago it could be seen that Apple is able to grow an increasing user base with increasing h/w and services sales. As Horace Dediu has said, "Apple is in the customer creation business". The iPhone is the product which grows that base the most, but if management is to be believed (and it is illegal for them to lie in public statements), then a very solid portion of each new product version goes to newcomers (wasn't last quarters Mac sales a large portion to new & switchers)? New to Mac, new to iPhone, new to iPad. Every quarter the base is growing still. The products just last a long time, and so upgrade cycles continue to lengthen across the board (my iMac is 8 years old, and my MBP is 6, but I am going to get new ones in the coming few years).
Any analyst worth a dime should be focusing on these aspects (positive or negative, upside and risks) - not whether iPhone 8/X is going to be the iPhone that provides a larger than expected bump in sales. Any "super cycle" of this year (if it happens) will only make next year look a little weaker, but that is completely missing the point of the companies future prospects by growing that base which increasingly spends money with Apple across the board. Isn't that why Facebook and Alphabet and all of the "unicorns" are highly valued - based on the potential of the future.
Why dump the shares? Just sell at-the-money covered calls a year out. You'll retain the shares (delaying the day you pay taxes), get the dividend payments, and get a chunk of option income to offset any drop in the share price. And that's option income you can invest elsewhere right away and for that entire year make gains on it. All without incurring a single dime in tax burden for the current tax year (the tax year in which you make that move).